(a) In relation to each type of insolvency procedure available in the legal system of Indonesia, what assets of the corporate debtor are available to its administrator to satisfy the claims of its creditors?

Pursuant to Article 19 of the Bankruptcy Law, the bankruptcy estate includes all of the wealth of the debtor at the time of the bankruptcy declaration, including that acquired during the bankruptcy proceeding. Pursuant to this provision, the bankrupt estate of the debtor also covers the assets of the debtor located outside of Indonesia. Moreover, the bankrupt estate also comprises any inheritance of the debtor that is obtained during the bankruptcy proceeding. However, Article 40 of the Bankruptcy Law stipulates that any inheritance of the debtor that is obtained during the bankruptcy proceeding should not be automatically included as part of the bankrupt estate except by a special right to register it as part of the bankrupt estate. The actual operation of this Article is unclear.

In summary, all assets owned and possessed by the debtor are included as part of the bankrupt estate and are available to the receiver to satisfy the claims of unsecured creditors. Exceptions to the foregoing are assets that have been encumbered as collateral to secured creditors.

(a) To what extent and in what circumstances may the administrator of a corporate debtor take steps to recover assets of the debtor by overturning past transactions involving property of the debtor? (For example preferences given to certain creditors over others, invalid charges granted by the debtor, uncommercial transactions entered into by the debtor, profits on sales to and from the debtor at an undervalue or overvalue.)

Transactions of a debtor prior to a declaration of bankruptcy can be overturned if detrimental to the creditors. The right of annulment of past transactions involving assets or property of the debtor is set forth in Articles 41 to 44 of the Bankruptcy Law. The act of annulling past transactions is sometimes referred to in Indonesia by its Latin phrase, "actio paulian".

Article 41 of the Bankruptcy Law stipulates the general rule that an annulment of past transactions can only be granted if it can be proven that at the time of the transaction both the debtor and the party concerned (i.e., the transferee of the asset) were aware or should have been aware that such action would cause losses to the creditors. Based on the foregoing, a receiver is empowered to annul such transactions only if it can establish that both parties to the transactions were aware or should have been aware that the transaction was detrimental to the creditors. Note that the burden of proof lies with the receiver and there is no time limit on past transactions that can be annulled.

On the other hand, Article 42 of the Bankruptcy Law states that for legal acts causing losses to the creditors which were undertaken within one year of the declaration of bankruptcy and which were not actually required to be undertaken by the debtor, unless it can be proven to the contrary, the debtor and the party with which such actions were undertaken are deemed to have been aware, or should have been aware, that such actions would cause a loss to the creditors, if such actions:

(i) were obligations in which the debtor¡¦s liability substantially exceeded the obligation of the party with which such commitment was entered into;

(ii) constitute a payment for, or a guarantee for, a debt which has not yet reached maturity or which is not yet payable;

(iii) were undertaken by a debtor with certain specified relatives or affiliates.

In conclusion, if a transaction meets one of the foregoing criteria, a receiver could take action to annul the transaction without having to prove that the debtor and the third party were aware or should have been aware that such actions would cause losses to the creditor. Note that the annulment under Article 42 is limited to transactions undertaken within one year of the bankruptcy proceeding.

(b) What powers or mechanisms are available to each type of administrator for investigation of the affairs of the corporate debtor, for examination of persons formerly involved in the management or control of the debtor, and for the discovery of assets of the debtor?

Article 101(1) of the Bankruptcy Law provides that the bankrupt debtor is obligated to appear before the Supervisory Judge, the Receiver or the Creditors Committee to provide all and any relevant information, if the bankrupt debtor is summoned for such a purpose. Since the debtor is usually a corporate debtor, its representative is the party that should answer the summons. Therefore, this provision applies to members of the Board of Directors and Board of Commissioners of the corporate debtor. We believe that during the questioning inquiries can be made regarding the manager and management of the debtor.

(c) What procedures may be employed by each type of administrator for the recovery of assets of the corporate debtor which are available for distribution to creditors? (for example initiation of legal proceedings, compensation from directors.)

Please see our discussion in answer to question (a) above.